A mortgage is a loan secured by real property.
The borrower receives financing to buy or refinance property and promises to repay the debt, usually through scheduled installments. The property serves as collateral, so the lender may have legal remedies if the borrower defaults. In many systems, foreclosure can ultimately lead to a forced sale of the property.
A mortgage normally includes principal and interest, although payments may also include amounts collected for property taxes and insurance. The loan agreement and the security instrument may be separate documents, depending on local law. In the United States, a mortgage or deed of trust commonly creates the lender’s security interest.
Mortgage systems differ internationally. Some countries use fixed-rate loans, while others commonly offer variable-rate products. A mortgage is not the same as the deed: the deed transfers ownership, while the mortgage secures repayment. The borrower may own the property while the lender holds the security interest.